When Rodrigo Duterte, the country’s straight-talking president, was on the election trail last year, he admitted he was no expert on economics. But Duterte made a strength of his weakness, promising to rely on ‘the top economic minds’ in the country for advice. With the appointment of ‘Sonny’ Dominguez as finance minister, he appeared to be keeping that promise.
Dominguez is seen as a voice of reason in an administration that has too often resorted to populism. That reputation has earned him fourth place in our Finance Minister of the Year study — an impressive debut, even if he hasn't yet reached the heights of predecessor Cesar Purisima, who was named Asia's best finance minister in the first two years of the ranking.
He has been vocal about the need for a boost in infrastructure spending, promising to spend as much as 7% of GDP. But he also realises the money needs to come from somewhere. While pushing for a dramatic cut in the corporate tax rate, Dominguez has warned Filipinos that an income tax hike is likely.
Nor has he concentrated only on the level of taxation. Dominguez has also been vocal about the need to improve tax collection, addressing a problem that confronts governments across Southeast Asia.
Dominguez’s willingness to speak plainly about the problems the country faces is a clear strength. His readiness to come up with ideas to fix those problems, however, is even more impressive. Last May, a month before taking office, he outlined an eight-point economic plan that gave investors and executives greater clarity about what to expect from the incoming government.
Besides the emphasis on infrastructure spending and tax reform, this included a promise to boost state welfare, improve educational standards, address bottlenecks in land registration and — crucially — to remove a 40% ownership cap for foreign companies.
The Philippines’ new government has won plaudits from analysts for appearing more decisive than the previous administration. This may reflect the straight-shooting style of Duterte more than any of his cabinet ministers, but it does mean the finance minister is now in a position to deliver on the country’s undoubted promise.
Dominguez, a former chief executive of Philippine Airlines, is not a first-timer to government, having been agriculture secretary and natural resources minister during the administration of Corazon Aquino, the sympathetic widow who helped overthrow the 21-year rule of Ferdinand Marcos.
But the government faced vastly different challenges then. When Dominguez was picked as Cory Aquino’s minister of natural resources in 1986, the economy had just endured a 7.3% contraction, according to the World Bank. In contrast, the Philippines is now one of the fastest-growing countries in Asia —the Asian Development Bank thinks the country grew 6.4% last year.
The task facing Dominguez is to ensure that this impressive growth track continues. It is too early to tell whether he will live up to legacy of Purisima. But Dominguez has undoubtedly made a good start.
We are releasing our Finance Minister of the Year rankings day by day. Tomorrow, we reach the podium positions and another new minister who has impressed despite political distractions.